NEW DELHI, May 13 : Import duty on gold has been more than doubled to 15 per cent as India looked to curb non-essential imports and conserve foreign exchange for essential imports like crude oil and fertiliser, and support the rupee.
Here is an explainer on the gold import duty hike and its implications:
WHY WAS THE IMPORT DUTY ON GOLD HIKED?
India is the world’s second-largest importer of gold, after China. The import duty hike to 15 per cent, from 6 per cent, is aimed at discouraging domestic consumption at a time when India is already facing a high import bill of fertiliser, food and crude oil due to the ongoing war in West Asia since February 28.
WHAT IS THE IMPACT OF DUTY HIKE ON GOLD PRICES?
24-carat gold was priced at Rs 1,65,350 per 10 grams in the national capital on Wednesday, up from Rs 1,56,800 per 10 grams on Tuesday.
HOW MUCH GOLD IS IMPORTED INTO INDIA?
India’s gold imports surged more than 24 per cent to an all-time high of USD 71.98 billion in 2025-26. In volume terms, however, the shipments dipped 4.76 per cent to 721.03 tonnes in 2025-26. High international prices kept the gold import bill high in FY26.
WHAT IS THE TOTAL QUANTUM OF GOLD IN INDIA?
The Reserve Bank of India holds 880.52 MT of gold. Households own around 30,000 tonnes of gold valued at about USD 5 trillion — one of the largest private gold reserves in the world, according to estimates by Assocham.
WHAT WOULD BE THE MACROECONOMIC IMPACT OF DUTY HIKE?
The impact of the duty hike would be visible in the retail inflation data of May, and a full picture would be visible only in June. As international prices of gold remain elevated, the duty hike is not likely to have much of an impact on the Current Account Deficit (CAD), as even lower imports would come in at a costlier price. Besides, the rupee is likely to remain under pressure, as is evident from the currency touching a record low of 95.80 to a dollar.
HOW EFFECTIVE HAS PREVIOUS DUTY HIKES BEEN TO CURB GOLD IMPORTS?
Historically, import duty hikes have resulted in lower volumes of imports, but elevated global prices have kept the import bill high. Besides, there is additional worry on gold smuggling, as with higher duty, grey markets and syndicates become active to take advantage of domestic demand.
ANY OTHER POLICY MEASURES IN THE PAST TO REDUCE GOLD IMPORT?
The government had introduced the gold monetisation scheme in 2015 to mobilise idle gold held by households and institutions, and channel it into productive uses like supplying gold to the gems and jewellery sector and gradually reduce India’s reliance on gold imports. After a lacklustre response due to Indians’ fetish for physical gold, the scheme was discontinued in 2025. About 39,044 kg of gold was mobilised under the scheme.
Separately, Sovereign Gold Bond scheme too was introduced in 2015 to encourage investors to buy gold in digital form. The scheme received a good response but was discontinued in 2025 as it turned out to be high-cost borrowing for the government. (PTI)
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